In early 2027, a new tax form is going to land in the inbox of nearly every US crypto holder who used a centralized exchange in 2026: Form 1099-DA. For most people it will be the first time a broker has ever reported their crypto cost basis to the IRS. And for a large share of that basis, the number in the box is going to be blank, wrong, or quietly misread as zero.

The box everyone will be staring at is Box 1g, "Cost or other basis." It's the figure that decides whether a sale looks like a modest gain or a giant one. This guide walks through what Box 1g actually reports, why it comes back empty for self-custody, DeFi, and transferred-in coins, why an empty box is not the same as a zero-basis coin no matter what your software assumes, and how to reconcile the form against your own records once it arrives.

This is not tax advice. It's an explanation of how the form and its IRS instructions work, with links to the primary documents, so you know which questions to bring to a professional. For decisions about your own return, talk to one.

What Box 1g actually reports

Form 1099-DA is the new broker return for digital asset sales. Per the IRS's About Form 1099-DA page and the current form instructions, the reporting phases in: gross proceeds for sales effected after 2025, and basis information for covered securities sold after 2025. In plain terms, the first forms that carry a cost basis figure cover your 2026 transactions and are furnished in early 2027.

On the 2026 form itself, each sale gets a row of boxes. Box 1a and 1b name the asset, 1c is the number of units, 1d is the date acquired, 1e is the date sold, 1f is the proceeds, and 1g is "Cost or other basis." Your taxable gain is, roughly, Box 1f minus Box 1g. When 1g is right, the form saves you work. When it's blank or wrong, it becomes a number you have to argue with — on Form 8949, where the IRS now has the broker's version to compare against yours.

Here's the single most important thing to understand about that box, and it's stated directly in the instructions. For Box 1g, the IRS tells brokers to enter the adjusted basis of the asset sold, and then adds a line that almost no one reads: "Enter -0- in box 1g only if the digital asset sold actually had a basis of zero." A blank Box 1g is not a declaration that your basis was zero. It's a declaration that the broker didn't report basis at all. Those are completely different statements, and confusing them is exactly how a transfer between your own wallets turns into a five-figure phantom gain.

Why the basis box goes blank: the noncovered security rule

Whether Box 1g gets filled depends on a single classification: is the asset a "covered" or a "noncovered" security. Brokers must report basis for covered securities. For noncovered ones, per the instructions, "the broker is not required to report basis information," and the broker signals this by checking Box 9.

The definition of noncovered is where most crypto holders will get caught. Straight from the instructions, a digital asset is a noncovered security if it falls into categories including these three:

Read those against how real people actually hold crypto. Bought your ETH in 2021 and it's been sitting there? Acquired before 2026 — noncovered. Bought on one exchange, withdrew to a hardware wallet, and later sent it to a second exchange to sell? Transferred in — noncovered. Earned it in DeFi and moved it to Coinbase to cash out? The broker never had custody at acquisition — noncovered. In every one of those cases, the exchange is allowed to leave Box 1g blank and check Box 9, because it genuinely does not know what you paid.

This isn't a fringe scenario. An analysis by the crypto tax firm Summ, covering 30,000 US users, found that 57% of transactions happened on platforms that don't issue 1099-DA forms, and estimated that broken basis chains left affected investors with overstated gains averaging $14,500. The transfer and self-custody patterns behind the noncovered rule are the same ones that produce a $0 cost basis in tax software — the phantom-gain problem that exists in the report but never happened in your life. The 1099-DA doesn't fix that problem. It puts a government form around it.

Why the basis box comes back wrong even when it is filled

A blank box is the honest failure. The more dangerous case is a Box 1g that has a number in it — a number that's wrong.

When basis is missing, a broker can still populate the box using information you gave them, and there's a box on the form that admits it: Box 8, "Check if broker relied on customer-provided acquisition information." The instructions permit brokers to take customer-provided basis into account. That's reasonable, but it means the figure is only as good as what was entered — often by an importer stitching together a partial history, sometimes defaulting a transferred-in coin to a basis it can't actually see.

There's also a box that quietly marks exactly where the trouble starts. Box 12a reports the number of units transferred in to the broker, and Box 12b the transfer-in date. Those boxes exist because a coin that arrived from somewhere else carries a history the receiving broker never witnessed. Every unit counted in Box 12a is a unit whose true purchase price lives in a wallet or an exchange the current broker can't see — precisely the stranded-basis situation that per-wallet accounting made consequential in 2025.

So the form can be wrong in two directions at once. It can understate your basis, inflating your gain, when a transferred-in coin's real cost gets lost or defaulted low. And it can overstate your basis if customer-provided figures were optimistic. Only one of those errors feels good in April, and neither is one you want to discover in an IRS notice a year later.

This is not tax advice, and a broker's Box 1g is not the final word on your basis. What you paid is a question of your own records under section 6001, not of whichever number an exchange happened to print. If the form and your records disagree, that discrepancy is yours to substantiate and, if needed, correct on Form 8949 with your tax professional.

The other boxes that decide your basis story

Box 1g gets the attention, but three neighbors change how you should read it.

Box 2, "Check if basis reported to IRS," tells you whether the figure in 1g was actually transmitted to the government or is there for your information only. For covered securities it's reported; for a noncovered coin where the broker filled 1g voluntarily, it may not be. Knowing which is which tells you how much the IRS already thinks it knows.

Box 1d and 1e, the acquired and sold dates, quietly control your holding period — long-term versus short-term. When a coin is transferred in and its origin is unknown, the acquisition date is as much at risk as the price. A long-held position can surface with a recent acquisition date, flipping favorable long-term treatment into short-term. Koinly's forum has documented cases where long-held coins surfaced as short-term gains after a single unlinked transfer — the same mechanism, now printed on a federal form.

Box 9, the noncovered checkbox, is your fastest triage tool. When you get the form, the rows with Box 9 checked and Box 1g blank are the ones where you, not the broker, are the source of truth for basis. Those are the rows to reconcile first.

None of this is exotic. It's the ordinary consequence of a market where, per Coinbase-scale surveys and the Summ analysis, most people have moved coins between wallets and used platforms that sit outside broker basis reporting. The transition rules acknowledged the mess: the IRS issued Rev. Proc. 2024-28 to let taxpayers allocate existing basis per wallet, and issued relief on identifying broker-held units through Notice 2025-7, later extended by Notice 2026-20. Useful as that relief is, it governs how you identify and allocate basis — it does not reach into your unhosted wallet and reconstruct a purchase price the broker never had.

What to do when your 1099-DA lands in early 2027

You can't control what an exchange prints, but you can control whether you're ready to check it. A short, deliberate pass beats a surprise in filing season.

First, sort by the flags. Pull every row with Box 9 checked or Box 1g blank. Those are the sales where the broker has told you, in the form's own language, that its basis figure is either absent or not IRS-reported. Everything else is lower priority.

Second, don't let a blank become a zero. This is the expensive default. If your tax software or preparer imports a blank Box 1g and treats it as $0 basis, the entire proceeds get taxed as gain. The IRS instruction is explicit that -0- means an actual zero-basis coin, not an unknown one. A blank box is a prompt to supply your real basis, not permission to skip it.

Third, reconstruct the real number from your records. For each flagged coin, find what you actually paid: exchange statements, bank records, old confirmation emails, or the block explorer trail from the wallet the coins came from. That documented figure is what belongs on your Form 8949 — with the evidence kept alongside your return under section 6001.

The reconstruction is the expensive step, and the on-chain half of it can be done for you. Run my free scan to see which of your Ethereum transfers a tax tool would read as a zero-basis disposal — read-only, no sign-up, tx-hash on every line.

Fourth, watch the dates, not just the dollars. Confirm that Box 1d reflects when you truly acquired the coin, not when it was transferred in. A wrong acquisition date can cost you long-term rates even when the basis dollars are right.

Fifth, expect the form to disagree with your own tools, and don't assume the form wins. When a college professor ran identical transaction data through five crypto tax platforms, the results ranged from a $1,516 loss to a $2,696 gain against a true answer of a $1,266 loss. A broker's form is one more source in that spread, not an arbiter of it. If the basis chain behind a number is broken, the number is broken — no matter whose logo is on the page. If your basis records have gaps that the form now exposes, the durable fix is the same one behind a missing purchase history warning: find and rebuild the acquisition, don't paper over it.

The reassuring part is that this is checkable. Box 1g either matches a documented purchase or it doesn't, and every mismatch is visible if you know which rows to inspect. Finding those before you file — rather than after a notice arrives — is the whole game.

FAQ

Does a blank Box 1g on Form 1099-DA mean my cost basis is zero?

No. Per the IRS instructions, a broker enters -0- in Box 1g only when the asset genuinely had a zero basis; a blank box means the broker did not report basis at all, usually because the asset is a noncovered security. Your real basis is whatever you can document under section 6001. The costly mistake is letting tax software import a blank as $0, which taxes the entire sale as gain rather than just your actual profit.

Why is my crypto a noncovered security on the form?

Because of how you acquired or held it. The instructions classify a digital asset as noncovered if the broker didn't have custody of it when it was acquired, if it was acquired before 2026, or if it was transferred into the broker from somewhere else, among other cases. Coins you bought in earlier years, moved between wallets, or earned in DeFi before sending to an exchange typically fall into one of these buckets, so the broker isn't required to report their basis and checks Box 9.

Do I still have to report the sale if Box 1g is blank?

Yes. A missing basis figure doesn't remove your obligation to report the disposal and compute the gain yourself, generally on Form 8949. The broker still reports your gross proceeds in Box 1f, and the IRS sees that number. Leaving the basis blank on your return would let the full proceeds be treated as gain, so the task is to supply and substantiate your real basis. How to handle a specific reconciliation belongs with a qualified tax professional.

This is not tax advice, and none of the above is a substitute for a qualified tax professional who can look at your actual records.

If you'd rather find the blank and broken basis before your 1099-DA does, Verilot Check reads your Ethereum wallets directly on-chain and shows every transfer between your own addresses that would otherwise surface as a zero-basis disposal, with a tx-hash on every line. Free and read-only — no wallet connection, no sign-up, up to 5 wallets and 500 events per scan, Ethereum mainnet today. Run my free scan.